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PriceSmart

Major International Giants in Homecare Products arrive in Colombia

Portafolio-La República, June 29 and August 10, 2010

PriceSmart formalized its arrival in Colombia and announced the purchase of a lot in Barranquilla, where it expects to locate its first store by mid-2011, with an investment of USD 17 million.

The warehouse store chain decided on Barranquilla thanks to the availability of land, where they were able to locate 19,500 square meters, but it nevertheless continues to look for opportunities in other cities in the country, including Bogotá.

PriceSmart sells to the final consumer who is willing to gain access to the stores by paying an annual membership, under the club model that has proved successful around the world.

Its market niche in Colombia will primarily be the consumers in strata 4, 5 and 6, and the price of membership will be between 25 and 30 dollars.

This strategy of securing customer loyalty is accompanied by a supply of products that reaches nearly 2,300 articles. The average sales area of a PriceSmart warehouse store is 5,500 square meters and can generate 130-150 jobs. The PriceSmart promise is quality products at constant low costs.

In the chain’s portfolio are perishable products, groceries, cleaning and homecare products, and even hardware products. Currently, there are more than 1.2 million active membership cardholders that receive benefits for pertaining to the club, which serves individual people, families, and business owners.

Similarly, the Chilean brand Casa & Ideas (largest Chilean company that specializes in do-it yourself home and decoration design products) decided to enter Colombia through a franchise. The brand expects to open ten stores in Colombia in the next three years.

The future annual revenues of the first ten Casa & Ideas in Colombia are expected to be near USD 50 million, which is comparable to Chile in size and double those of Peru.

The president of Tugó-Bima, Juan Carlos Restrepo, however, assured that the company’s plans are not just ten stores, but rather 23 stores in the next seven to ten years.

The first Casa & Ideas in Colombia will be located in the Sante Fe Commercial Center in the north of Bogotá, and its opening is scheduled for the first half of October. A second locale will open its doors at the end of the 2010 or beginning of 2011. The franchise is also looking at opening stores in areas apart from the envisioned locales, which include Medellín, Cali, Barranquilla and Cartagena.

Every inauguration of a Casa & Ideas locale has an estimated value of USD 750,000, including the payment of the right to determine the product costs.

The multinational Office Depot, which also arrived in Colombia with an expansion plan of USD 55 million at the end of 2009, has realized a series of store inaugurations during the last year which combine the large store format the express store model. The chain has opened nine establishments, half of which are convenience stores.

According to Office Depot’s Manager for Colombia and Panama, Fernando Barco Maldonado, the company’s goal is to complete 13 points of sale in which it will invest close to USD 8 million. Close to half of these store openings will operate under the express model.

Finally, the Colombian-Chilean company Sodimac (owners of the Homcenter and Constructor stores) is making progress on its expansion plans. The company will open in the second semester of 2010 two more stores, one in Bucaramanga and the other in Bogotá through an investment estimated at USD 65 million.